Ain?t it "Suite"? Bundling in the PC Office Software Market

Michael Riordan, Neil Gandal and Sarit Markovich

No 9181, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We examine the importance of office suites for the evolution of the PC office software market in the 1990s. An estimated discrete demand choice model reveals a positive correlation of consumer values for spreadsheets and word processors, a bonus value for suites, and advantages for Microsoft products. We employ the estimates to simulate various hypothetical market structures to evaluate the profitability, welfare, and competitive effects of suites under alternative correlation assumptions.We find that there is a huge benefit to firms from bundling components (i.e., a spreadsheet and a wordprocessor) when the correlation of consumer preferences over the components in the bundle is positive. Our work adds another aspect to the recent work in the strategy literature that examines benefits from bundling when there are complementary relationships across the products in the bundle.

Keywords: Bundling; Office productivity software; Simulations (search for similar items in EconPapers)
JEL-codes: D0 L1 (search for similar items in EconPapers)
Date: 2012-10
New Economics Papers: this item is included in nep-dcm
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Journal Article: Ain't it “suite”? Bundling in the PC office software market (2018)
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